Flipping facts for kids

Flipping is a term used in economics. It means buying something and then quickly selling it again for a profit. This idea applies to many different things, like houses or shares in a company. The goal is always to make money fast.

Flipping Houses

Buying and selling houses happens all the time. When someone wants to sell their house, they often hire a realtor. A realtor helps to advertise the house and find a buyer. They charge a fee, usually a small percent of the selling price. This fee is called a commission.

Flipping houses means an investor buys a property and then sells it quickly for more money. Often, the investor will pay to make the house look better. This could mean painting, fixing things, or updating rooms. The investor needs enough money to buy the house and pay for these improvements. Realtors help with the sale, but they don't usually buy or sell the houses themselves.

Flipping houses can be risky for investors. They must know the true value of a property. It's important not to pay too much for the house or spend too much on repairs. Sometimes, very old or damaged houses are sold at auctions. Buyers might not be able to check the house thoroughly before buying it. This can lead to unexpected costs to fix hidden problems. Also, the house needs to sell fast. If it doesn't, the investor's money is tied up for too long.

There are also risks for people who buy houses that have been flipped. They need to make sure the improvements were done well.

Flipping Stocks

Initial public offerings (IPOs) happen when a private company sells its shares to the public for the first time. This is called "going public." Flipping stocks means buying these new shares and selling them within a few days. The hope is that the share price will go up very quickly.

Companies that help sell these new shares are called underwriters. They usually want investors to hold onto their shares for a longer time. If an investor flips too many stocks, underwriters might not let them buy new shares in the future. This is called blacklisting, even though flipping stocks is legal.

Other Ways People "Flip"

In the United Kingdom, the term "flipping" was used to describe Members of Parliament changing which house they called their main home. They did this to get more money from public funds, which were meant to help with their expenses.